Qantas to raise fares from 4 June

[Dave Noble]

The rising cost of jet fuel has once again prompted Qantas Airways Ltd to increase the price of its air tickets.

Qantas said its international air fares would rise by around 4% and domestic fares by about 3% for tickets issued in Australia from June 4.

The increases follow hikes of about 3% for international fares and 3.5% for domestic fares earlier this month.

Full story at Fuel price drives Qantas fare increase - News - Travel - smh.com.au

Dave

 

[Mal]

Is there ever any good news with Airlines these days?

At least Qantas is bumping up the fare (again) rather than increasing the fuel surcharge. I'm still wondering if that is set to disappear in the future and Qantas is starting to prepare for it to be absorbed into the base fare.

I think with fuel surcharge included, a BNE-SYD flight will now comprises the following fuel-specific charges:

$26 - Domestic Fuel Surcharge.
$5 - Increase in May identified as a fuel increase
$4 - Possible increase in June.
$X - Portion of the rest of the ticket which is assigned to fuel. (Maybe $20-30 ? )

Does a single passenger use $35 (low end) to $65+ worth of fuel on a flight?

Not ranting, just curious...

 

[dajop]

One thing Qantas is probably doing a lot better than many carriers on this. A) they have a fairly resilient market that seems to accommodate such fare increases. and B) They receive a significant proportion of their revenue in AUD which has a tendency for its USD valuation to move in the same direction as the oil price.

The tide seems to have turned a bit, that is two fare increases in a row, without surcharge increases.

 

[maninblack]

One thing Qantas is probably doing a lot better than many carriers on this. A) they have a fairly resilient market that seems to accommodate such fare increases. and B) They receive a significant proportion of their revenue in AUD which has a tendency for its USD valuation to move in the same direction as the oil price.

The tide seems to have turned a bit, that is two fare increases in a row, without surcharge increases.

My TA just sent me through the fare increase warning this arvo re some as yet un-ticketed bookings.

She says QF is now un-officially the "worlds most expensive" airline for Australian travelers, I suppose she means ex-Australia and is generalizing, but she is probably essentially correct

 

[JohnK]

Not another increase! The biggest issue in running a business is not just rising fuel costs.

I am probably alone in this line of thinking but I would like to see airlines take a different approach to cost cutting and increasng profits like reducing executive salaries, cut out unnecessary staff travel including discounted waitlisted flights, put an end to bonuses including performance related bonuses effective immediately and postpone any Christmas parties.

 

[simongr]

I am probably alone in this line of thinking but I would like to see airlines take a different approach to cost cutting and increasng profits like reducing executive salaries, cut out unnecessary staff travel including discounted waitlisted flights, put an end to bonuses including performance related bonuses effective immediately and postpone any Christmas parties.

I don't think you ar ealone but equally I don't think you are correct. The staff travel forms part of the employee compensation package so that would be tough to get rid of. Generally staff parties go when the company is doing very badly - also I am not sure what the level of staff parties are. My relative that works for QF does not remark on the quality of the staff party compared to the functions that I am fortunate enough to attend not working at QF.

Just in relation to performance related pay - are you suggesting that companies reward senior management regardless of whether they do a decent job? That would be a somewhat novel concept

 

[oz_mark]

I have no idea what a QF Christmas Party is like (and I imagine that if they happen there would be multiples in many loctaions), but in the scheme of things Christmas Parties tend to be a trivial expense.

The price of oil is hurting in lots of places. How much of the current rapid increase is due to speculators, and how much is due to supply/demand issues will determine how much further it goes up, how much and how rapidly it may fall, but it does seem that QF are moving to base fare adjustments more now.

 

[NM]

At least Qantas is bumping up the fare (again) rather than increasing the fuel surcharge.

And for this I applaud them. I have no issues with anyone service provider increasing their prices when their costs increase. Time to move the entire YQ to the base fare.

 

[simongr]

Just wondering how the airlines should then deal with alliance fares like the DONE4 etc. where they dont control the base fare?

 

[NM]

Just wondering how the airlines should then deal with alliance fares like the DONE4 etc. where they dont control the base fare?

Those fares are reviewed regularly and in my experience the base fares (ex Australia at least) have risen more than the fuel surcharges. So they are being revised upwards as costs increase. I am sure the alliance airlines have a significant input to setting the base fare prices. I expect it is QF's influence in setting the ex-Australia pricing that has resulted in the significant increases of those fares.

 

[JohnK]

I have no idea what a QF Christmas Party is like (and I imagine that if they happen there would be multiples in many loctaions), but in the scheme of things Christmas Parties tend to be a trivial expense.

I don't know what sort of Christmas parties Qantas has for their staff but when I was working for an IT company a few years ago they stopped the annual Christmas party/harbour cruise. There was over 100 people going to these functions at what I would estimate over $100/head. So an approximate saving of around $10,000. For a company that was not doing well financially and counted every penny it was a significant saving.

How many employees work for Qantas? Would the saving be significant or trivial?

 

[simongr]

QF have 16K employees I think.

The point is that was in a company that was not doing well financially - QF is doing well. If they cut whatever Xmas parties they currently do whilst the company continus to succeed it will further disenchant staff.

I can however confirm that QF do not send their engineers on harbour cruises.

 

[dajop]

Aaah the old christmas party axeing raises it head .... A few years ago now we had an edict from Global HQ that to save costs - Christmas parties were not allowed. So we axed our Christmas party and instead during December arranged a general office meeting at a nearby pub at which the company paid for drinks & meals .... but despite this we were able to meet the saving targets set for us. My point being taking a blanket approach (depending on size of company) does not always work, its the target that counts.

As for Qantas I think the cost of Xmas parties is probably miniscule against the rising cost of fuel. They'd be better off examining if people really care about getting a pack of pretzels on their 2pm flight!

As for executive bonuses, I think properly managed and with proper oversight they have a place in extracting value from a company as a shareholder. It is not as simple as just cutting them out or cutting them. Of course if the market has dropped 10% and invidual company has dropped 30% in value - they shouldn't be awarded. One other danger I see with bonuses - if decisions are made to achieve a short term incentive that otherwise would not make business sense, and I have seen this happen.

 

[NM]

As for Qantas I think the cost of Xmas parties is probably miniscule against the rising cost of fuel. They'd be better off examining if people really care about getting a pack of pretzels on their 2pm flight!

Perhaps the next Qantas staff Christmas party should be catered by their in-flight catering dept, so all staff receive a popper juice and bag of pretzels for the 2-hour event .